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Drivers of China's foreign direct investment into Africa

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  • Jorge Braga de Macedo
  • Brites Pereira Luis
  • Jose Mario Lopes

Abstract

We assess the determinants of Chinese direct investment in Africa compared with those of global FDI. We find that economic size and macroeconomic stability are positively correlated with Chinese and global FDI in Africa. Institutional variables, such as accountability and rule of law, are not significant in either case and the same can be said about FDI-aid complementarities. The presence of oil is a determinant of Chinese FDI but not of global FDI into Africa. Conversely, the openness of the economy is a determinant for global FDI but not of Chinese FDI, which appears to favour closed economies possibly due to industrial organizational concerns. While these differences accord with intuition, we find no evidence for the claim that Chinese FDI in Africa is related to non-economic governance in a specific way that differs from global practice. More refined governance indicators should be used to verify whether Chinese and global FDI into Africa remain indistinguishable on this score: we plan to do this in future research.

Suggested Citation

  • Jorge Braga de Macedo & Brites Pereira Luis & Jose Mario Lopes, 2009. "Drivers of China's foreign direct investment into Africa," Nova SBE Working Paper Series wp544, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp544
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    References listed on IDEAS

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    1. Asiedu, Elizabeth & Lien, Donald, 2004. "Capital Controls and Foreign Direct Investment," World Development, Elsevier, vol. 32(3), pages 479-490, March.
    2. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
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    Cited by:

    1. Oluwasegun Oluwaseyi Seriki, 2020. "Looking through the African lenses: a critical exploration of the CSR activities of Chinese International Construction Companies (CICCs) in Africa," International Journal of Corporate Social Responsibility, Springer, vol. 5(1), pages 1-9, December.
    2. Bartels, Frank L. & Napolitano, Francesco & Tissi, Nicola E., 2014. "FDI in Sub-Saharan Africa: A longitudinal perspective on location-specific factors (2003–2010)," International Business Review, Elsevier, vol. 23(3), pages 516-529.
    3. Abdoul' Ganiou Mijiyawa, 2014. "Policy Dynamics and Foreign Direct Investment Inflows in Ghana: What Are the Lessons for West African Countries?," Journal of African Business, Taylor & Francis Journals, vol. 15(1), pages 1-12, April.

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